What policy tool would you propose to push

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Question: The demand follows the function P=100-0.1Q and the supply is given by P=10 0.05Q. Find the equilibrium price and quantity and graph the market! (2 1)

b. Assume that there is an externality associated with vaccinations thanks to herd immunity. Is the externality positive or negative? Will the marginal social benefit curve be higher or lower than the private? (1 1)

c. Assume that the marginal social benefit function is given as P=130-0.1Q. Add the curve to your graph and determine the socially optimal equilibrium! (1 2)

d. Mark the consumer and the producer surplus, and the deadweight loss under private provision! (3)

e. Compute the amount of deadweight loss on the market! (2)

f. What policy tool would you propose to push the market equilibrium to the social optimum? Would you apply it on the consumer or the producer side?

Reference no: EM133630142

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